Brain dead patients as research subjects in xenotransplantation

It turns out that economists aren't the only people willing to contemplate things that others may find repugnant... Mike Rees, the kidney surgeon who leads the Alliance for Paired Donation, also has a lively research interest in xenotransplantation, which offers the still distant prospect of using pig kidneys to cure human kidney disease. But first a lot of research needs to be done...would it be ok to use it on brain dead patients whose dead body is still kept functioning on a ventilator? Or would that be disrespectful of the dead?

The last bullfight in Catalonia

Another transaction becomes repugnant:

The last Ole! Bullfighting comes to an end in Catalonia

Almost seven hundred years of Catalan bullfighting history ended on Sunday night with the final death blow dealt by its hometown hero.

Harvard Nobel Prediction Market

Ran Shorrer asks me to post the following announcement:

It's that time of the year again!

The recipients of the Nobel Memorial Prize in Economics will be announced soon, which means there's little time left for you to place your bets in the Harvard Nobel Prediction Market! Put your economics training to the test and see if your predictions can bring you fame and riches. Previous participants have walked away with sizable winnings and bragging rights.

To enter, fill out this Google Form or print and mail this paper form. Betting closes at 11:59pm EST, October 9th, 2011. Online payments should be received by the same deadline, and payments by mail must be post-marked by October 9th, 2011. Cambridge economists may also give the payment to Brenda Piquet or put the money in Daniel Pollmann's Littauer mailbox.

Submit online payments to johnczhou@gmail.com from your Amazon Payments account. To pay IN CASH, mail the printed form and the sum of your bets to

Daniel Pollmann, Littauer Center, Harvard University,
1875 Cambridge St, Cambridge MA 02138 

Check our website on Sunday, October 9th for the most popular choices, as well as for the winners soon after October 10th.

**************

Update

Al Roth  -  10:40 AM  -  Public

A commenter asks if this is legal--does anyone know?

Market Design: Harvard Nobel Prediction Market

  -  Comment  -  Share

Mallesh Pai - Probably not- intrade had to move out of of the US for legality reasons- and they're the biggest prediction market I know... (I'm guessing +David Pennock will know more).

10:47 AM (edited)   

David Pennock - Not technically legal in the US, but neither are office pools. No one would ever be prosecuted for betting in this. The operator of the market might worry more, but I highly doubt something on this scale on this topic would be prosecuted. Look up betcha.com for the worst-case scenario but that was sports betting, a clear no-no.

11:02 AM   

Driving and voting while female in Saudi Arabia

Find the repugnant transaction in this story...


Saudi woman to be lashed for defying driving ban

"A court in Saudi Arabia has sentenced a woman to 10 lashes for breaking the country's ban on female drivers.
...
"The sentence comes two days after the Saudi leader King Abdullah announced women would be allowed to vote for the first time in 2015."


Update: Saudi king revokes woman's lashing sentence
""Thank God, the lashing of Sheima is cancelled. Thanks to our beloved King," said Princess Amira al-Taweel, wife of Saudi billionaire Prince Alwaleed bin Talal, on her twitter account."

Full tuition and college admissions

The NY Times is shocked by the results of a survey of admissions officers: Universities Seeking Out Students of Means

"More than half of the admissions officers at public research universities, and more than a third at four-year colleges said that they had been working harder in the past year to recruit students who need no financial aid and can pay full price..."
...
"Similarly, 22 percent of the admissions officials at four-year institutions said the financial downturn had led them to pay more attention in their decision to applicants’ ability to pay.

“As institutional pressures mount, between the decreased state funding, the pressure to raise a college’s profile, and the pressure to admit certain students, we’re seeing a fundamental change in the admissions process,” said David A. Hawkins, director of public policy and research at the National Association for College Admission Counseling. “Where many of the older admissions professionals came in through the institution and saw it as an ethically centered counseling role, there’s now a different dynamic that places a lot more emphasis on marketing.”

Dialysis: continued debate about tragic choices, and how to finance not having to make them

This recent story about who pays for dialysis for uninsured illegal immigrants reminds me of the initial stories of how Medicare came to cover dialysis, making kidney disease unique in the way it is financed. There is a special horror in denying routine life saving treatment to patients who will die without it. That is, emergency rooms aren't supposed to deny treatment to anyone, but dialysis only becomes an emergency when regular access is denied...but we haven't done a great job of figuring out the financing.

Here's the NY Times story on illegal immigrants, by Kevin Sack: Deal Reached on Dialysis for Immigrants


"Twenty-one illegal immigrants will continue to receive regular dialysis at no cost for three years under an agreement disclosed Friday by Atlanta’s public hospital, Grady Memorial, and the world’s largest dialysis provider, Fresenius Medical Care.

"The deal solves an impasse created when a previous one-year contract between Grady and Fresenius expired on Aug. 31 and the dialysis provider refused to serve patients who showed up for their regular thrice-a-week treatments.

"The patients spent the past week seeking care in Atlanta-area emergency rooms, including Grady’s, which are required by federal law to screen and treat those at risk of impairment or death.

"In some instances, ailing patients were turned away by emergency room doctors who determined that their elevated potassium levels and fluid retention were not yet severe enough to justify emergency treatment. Each renal patient’s need for dialysis is different, but those unable to artificially clean the toxic substances from their blood can die in as little as two weeks.
...
"The patients’ odyssey began two years ago when Grady closed its outpatient dialysis clinic, where many had received free treatment for years. Illegal immigrants are not eligible for Medicare, which covers most dialysis costs for American citizens. After the immigrants filed a lawsuit and gained news media attention, the hospital agreed to pay Fresenius to care for them during a transitional period. Other than the past week, it has never ended.

"Under the new contract, Grady agrees to pay Fresenius $15,500 per patient per year for treatment at the company’s outpatient clinics. That is less than half of the $750,000 flat fee Grady paid Fresenius for the yearlong contract that just ended.

"Grady, which receives direct appropriations from two county governments, faces a budget shortfall of more than $20 million this year. It maintained in negotiations that it could not afford to pay Fresenius the previous rates."
***********

Here's a previous post on how dialysis entered Medicare:

The special (Medicare) status of kidney disease

" In Seattle, in response to financial limitations, access to dialysis was restricted through explicit rationing carried out by an anonymous lay committee — an approach that was laid bare for the American public in a Life magazine article in November 1962.² Elsewhere, decisions limiting access to dialysis were tacitly incorporated into traditional medical decision making. Dialysis highlighted the tragic choices that had to be made when fundamental societal values encountered problems of scarcity.

"

...
"In November 1971, a patient received dialysis — albeit very briefly — at a hearing of the House Committee on Ways and Means."
**************


And here's a post on the continued debate about tragic choices, even without the added distraction of immigration status: 

Medicare payments for dialysis

The New York Times describes the growing federal expenses for dialysis, and some surrounding controversy: When Ailments Pile Up, Asking Patients to Rethink Free Dialysis


"Of all the terrible chronic diseases, only one —end-stage kidney disease — gets special treatment by the federal government. A law passed by Congress 39 years agoprovides nearly free care to almost all patients whose kidneys have failed, regardless of their age or ability to pay.


"But the law has had unintended consequences, kidney experts say. It was meant to keep young and middle-aged people alive and productive. Instead, many of the patients who take advantage of the law are old and have other medical problems, often suffering through dialysis as a replacement for their failed kidneys but not living long because the other chronic diseases kill them. 

Howard Raiffa's Memoir: Analytical Roots of a Decision Scientist

Estelle and Howard Raiffa just hosted a book party, to mark the publication of his new book "Memoir: Analytical Roots of a Decision Scientist."

I guess the mark of a pioneer whose work is still of wide, contemporary interest is that, when you read his memoir, you feel he's talking about the early days, not the old days...

Incidentally, Raiffa is my PhD advisor's PhD advisor, and the last picture in the book, titled "Intergenerations of Ph.D. mentors..." is of Raiffa, Bob Wilson, and me. It was taken at Stanford on the occasion of the conference that resulted in the volume Game Theory in the Tradition of Bob Wilson, which includes the short article by Howard, "Tribute to Robert Wilson on his 65th Birthday."

Beauty can make for a repugnant transaction...

At least some Saudi women seem to be objecting to a transaction that might be agreeable to the other parties involved: Saudi women object to import of Moroccan maids as too beautiful

"Women in Saudi Arabia have innundated the government with complaints over plans to import Moroccan women as housemaids. The reason: Moroccan women are just too beautiful and may lure the Saudi husbands away.
...
"The ban on maids from Indonesia and the Philippines hit Saudi households hard, causing many to resort to hiring illegal maids over Ramadan. The Saudis are reliant on foreign workers to perform their household tasks for them and very few Saudi women will work in such menial positions despite high unemployment, as they would be looked down on by other Saudis.

"The ban came into effect following the two countries attempts to introduce regulations for the work conditions of their nationals. Trade Arabia said both countries demanded better working conditions for their employees. Saudi walked away from the negotiations abruptly and decided to look for domestic employees from countries not as concerned about imposing regulations to protect their workers. It also became clear that lower rates of pay could be offered to other nationals. "
********

See also Maid from Morocco? No thanks, say Saudi wives

HT: Nageeb Ali

Upheaval among college sports conferences

The Chronicle of Higher Ed, reporting on the recent changes in colleges athletic affiliations (with indications of more to come), had this to say: Pitt and Syracuse Join ACC in Major-Conference Shakeup

"The weekend’s upheaval comes at a time when conference affiliation has assumed unparalleled importance for many major-college programs. Media-rights contracts have driven much of the recent reshuffling: Leagues with expansive geographic reach can secure footholds in key television markets, and are able to bring in ever-higher sums from media companies with a seemingly insatiable appetite for college sports."
*********

The Atlantic Coast Conference seems likely to add more members.

Vacancy chains and reneging on / recontracting for arrangements for musical performances

Different markets have different cultures regarding how binding are different kinds of arrangements reached far in advance. A recent fall by an orchestra conductor, which forced him to withdraw, casts some light on the classical music biz: Maestro’s Injury Ignites Game of Musical Chairs

"The effects of James Levine’s accident this month and his replacement as conductor at the Metropolitan Opera have rippled across two continents. There is rage in Rome and vexation in Vienna. Genoese music lovers have been deprived of a performance of Beethoven’s Ninth. At an opera house in Essen, Germany, unsung assistant conductors and a British import get to shine. Even student musicians at U.C.L.A. are affected; a famous maestro had to postpone a concert with them.

"The Met called on Mr. Levine’s standby and heir apparent as music director, Fabio Luisi, to replace him. That caused Mr. Luisi to cancel engagements next month in Rome, Genoa, Vienna and San Francisco. Substitutes for Mr. Luisi had to be found, and in some cases Mr. Luisi’s subs needed subs.

"The Tetris-like sequence of events also served as a vivid example of how haphazard classical music marquees can be: star singers, soloists and conductors come and go with regularity because of sickness or better opportunities, despite their long-term billing. Usually it’s done in a spirit of mutual back scratching and gentility. Sometimes protocol breaks down, as in this case, with public criticism from music officials in Rome and Vienna.

"Mr. Levine, who has suffered a series of physical ailments, needed emergency surgery after falling while on vacation in Vermont and will be out at least until January, the Met said. Mr. Luisi, who held the title of principal guest conductor, was instantly upgraded to principal conductor. He arrived on Sept. 11 and began rehearsals the next day. He will conduct various performances of Mozart’s “Don Giovanni” and Wagner’s “Siegfried” through Nov. 5.

"The first casualty of Mr. Luisi’s Met engagement was a new production of “Elektra” at the Teatro dell’Opera in Rome, which issued a blistering statement saying that Mr. Luisi’s abandonment of his obligations on such short notice was a “regrettable matter” that had harmed the world of classical music. The house threatened unspecified action, possibly legal. Mr. Luisi was to have conducted five performances there.

"In defense of Mr. Luisi, Peter Gelb, the Met’s general manager, said the Italian opera scene was notoriously unstable. “Italian companies cancel right and left,” he said. “They of all people should understand that certain situations arise.”

"The Rome company hired Stefan Soltesz, the general and artistic director of the opera house in Essen, Germany, who himself proceeded to cancel appearances at his own house to make time for Rome. Mr. Soltesz, a Strauss expert who has conducted five productions of “Elektra,” said he took the Rome job because he admired the production’s director, Nikolaus Lehnhoff, and viewed the Rome opera as on the upswing.

"Mr. Soltesz wanted to keep his options open for freelancing, a spokesman said.

"Mr. Soltesz, 62, said he had no qualms about bowing out of duties in Essen, where he conducts an enormous number of performances: up to 70 a year. He also drew a distinction between taking leave from his own house and cancelling a guest appearance, as Mr. Luisi did.


“In Essen I make the programs,” he said. “I am the boss there. It’s a big difference.” Mr. Soltesz said he would never cancel one guest appearance for another.

"In Essen, a respected German opera house, two staff conductors, Wolfram-Maria Märtig and Volker Perplies, will take over two free concerts that Mr. Soltesz was to have conducted and two performances of “Madama Butterfly.” They will also run rehearsals for the forthcoming “Tales of Hoffmann.”

"Michael Francis, a 35-year-old Briton who has made last-minute rescues a specialty, will conduct two symphony concerts on Sept. 29 and 30, giving up time he had planned to devote to studying scores. A conductor is still being sought for the opening night of “The Flying Dutchman” on Oct. 8.

"Mr. Luisi also canceled concerts with his own orchestra, the Vienna Symphony, where he holds the title of chief conductor. He was to have led performances of Mahler’s Symphony No. 7 on Oct. 12, 13 and 14 at the fabled Musikverein. The symphony has borne the brunt of Mr. Luisi’s Met substitutions. It had to replace him several times last season when he filled in for Mr. Levine.

“It’s practically becoming routine,” said Thomas Angyan, the artistic and executive director of the Musikverein, where the symphony often plays. Mr. Angyan never has trouble finding someone to conduct at the Musikverein, he said, and within a day or two he engaged the veteran German conductor Lothar Zagrosek, who has long experience in Vienna.

HT: Muriel Niederle

Designing retirement plan default options

One of the big successes of behavioral economics has been in disseminating that decision making and information gathering are costly, so that default options matter. The WSJ seems to have taken the empirical lesson of behavioral economics to heart (even if not always on its editorial page) and reports a study of the effects of default settings.

401(k) Law Suppresses Saving for Retirement

"A 2006 law designed to boost employees' retirement-savings is having the opposite effect for some people.
"Under the law, companies are allowed to automatically enroll workers in their 401(k) plans, rather than require employees to sign up on their own. The measure was intended to encourage more people to bulk up their retirement nest eggs—a key goal in a country where millions of people aren't saving enough.

But an analysis done for The Wall Street Journal shows about 40% of new hires at companies with automatic enrollments are socking away less money than they would if left to enroll voluntarily, the Employee Benefit Research Institute found. The nonprofit performed a complex computer simulation of savings patterns drawing on data from more than 20 million 401(k) participants.

The problem: More than two-thirds of companies set contribution rates at 3% of salary or less, unless an employee chooses otherwise. That's far below the 5% to 10% rates participants typically elect when left to their own devices, the researchers said.

"Automatic enrollment is a double-edged sword," said Brigitte Madrian, a professor at Harvard University who is an expert on 401(k)s. "On the one hand, there's more participation. On the other hand, lots of employees are stuck at whatever default the employer selects.

""The total annual amount being put into 401(k) plans has increased by 13% since 2006, to an estimated $284.5 billion this year, according to consulting firm Cerulli Associates. That is largely because the rule has successfully prodded millions of people who wouldn't have saved a penny for retirement to start saving something.

"But for the 40% of new workers who would have picked a higher savings rate than the company assigned to them, billions of dollars in potential retirement savings will be left on the table, said Pamela Hess, director of retirement research at Aon Hewitt. The human-resources consulting and outsourcing company serves as a record-keeper for $296.8 billion in 401(k) plans.
...
"The Pension Protection Act of 2006, which was designed to shore up the pension system, also encouraged wider adoption of auto-enrollment in 401(k) plans. It removed obstacles such as state laws that restricted the practice and shielded employers who use certain types of investments from liability for losses suffered by participants who are auto-enrolled.

"The law has boosted auto-enrollment and participation rates dramatically. About 57% of large companies now automatically enroll new employees in 401(k) plans, up from 24% in 2006, according to Aon Hewitt. While employees are free to opt out, companies report average participation rates above 85%, compared with 67% for those without auto-enrollment, Aon Hewitt says.

"Yet 401(k) participants' average savings rates have fallen in recent years. Among plans Aon Hewitt administers, the average contribution rate declined to 7.3% in 2010, from 7.9% in 2006. The Vanguard Group Inc. says average contribution rates at its plans fell to 6.8% in 2010, from 7.3% in 2006. Over the same period, the average for Fidelity Investments' defined contribution plans decreased to 8.2%, from 8.9%.

"Vanguard estimates>about half the decline "was attributable to increased adoption of auto-enrollment."
...
"Many companies said they selected a 3% default contribution rate in part out of concern that a higher rate could prompt employees to drop out of these plans.Medtronic Inc. spokeswoman Cindy Resman said the medical-device maker opted for a 3% contribution rate because that was the prevailing rate in 2007, when the company implemented auto-enrollment."

Choice architecture in Britain: mandated choice for deceased donor registration

The BBC reports: Organ donated 'nudge' for drivers in new DVLA process

"The Driver and Vehicle Licensing Agency already asks if applicants want to be donors - but from Monday an online form will require that the answer is stated.

"Ministers hope it will help improve organ donation rates.

"Less than a third of people are signed up to be organ donors - despite research suggesting that nine in 10 would he happy to be one.

"The situation has prompted much debate in recent years about how best to improve rates.

"Some have called for presumed consent, where it is assumed an individual wishes to be a donor unless he or she has opted out by registering their objection.

"The government has so far rejected presumed consent and instead the Cabinet Office's behavioural insight team has suggested the driving licence idea as part of its "nudge" drive.

"The DVLA's existing scheme is already responsible for about half of the 1m new donor registrations each year.

"As well as becoming compulsory to answer the question, the section will be moved from the end to the start of the DVLA process, so when applicants from England, Wales and Scotland apply for new or replacement licences they will have to say whether they want to become an organ donor or not.

"When a similar scheme was introduced in the US state of Illinois, donor registration jumped from 38% to 60%."
*********

Whether mandated choice will improve organ donation rates (and not just registration rates) is an open question. But isn't it nice that the Cabinet Office has a behavioural insight team...  A tip of the hat to Sunstein and Thaler is in order.

My question about mandated choice is summarized in the following (somewhat out of context) paragraph from Kessler and Roth (forthcoming):

"A “mandated choice” system would also change the way in which individuals became registered donors (see Thaler and Sunstein 2008 and Thaler 2009). Under “mandated choice,” every individual who registered for a driver’s license (or potentially other state or federal documentation) would be required to indicate that he will be an organ donor or that he will not. While there is suggestive evidence that a “mandated choice” policy would (like “opt out”) generate more registration of organ donors (Johnson and Goldstein 2003, 2004), similar concerns arise about whether a change to mandated choice would lead to more donated organs and transplants. While the Uniform Anatomical Gift Act makes registering to be a donor legally binding under an “opt in” policy, failing to register as an organ donor is not a legally binding decision, whereas registering as a person who declines to donate could be legally binding on the next of kin. [Mandated choices could of course be framed so that a negative decision was merely recorded as a decision “not to register as a donor at this time,” but even this less binding formulation might inform next of kin’s beliefs about the deceased’s intentions and wishes.]  Discussions with the staff at the New England Organ Bank suggests that they are able to recover organs from about half of all non-registered potential donors in New England by approaching next of kin. This means that more than half of the people who are not currently registered under “opt in” would need to choose “yes” in mandated choice to increase the recovery rate. Consequently, it remains an empirical question whether a change to “mandated choice” would generate more organ transplants. 


(That's from
Kessler, Judd B. and Alvin E. Roth, ''Organ Allocation Policy and the Decision to Donate American Economic Review, forthcoming.)

Parking meters, old and new

Technology is coming to on-street parking. The NY Times reports on the changeover: The Last Days of the Old Parking Meter

"The city’s Transportation Department, which recently accelerated its meter retirement program, says the change will benefit city and citizen alike: the new meters read credit cards, speak seven languages, require less maintenance, and free up room on the sidewalk."

In Brookline, where I live, one can already begin to catalog some of the relative advantages and disadvantages of the old and new technologies, aside from those mentioned above, regarding credit cards in particular.

Waiting time and queues: old meters took your quarters immediately (if they were working well enough to take them at all); new meters take some time even if you are first in line, and since they serve multiple spots, you may have to wait while they take that time for the people ahead of you.

Parking at 7:45am: old meters made you start paying even if you rolled up to the curb before payment was required; new meters know that you don't have to pay until e.g. 8am, and so can sell you parking until 8:30 without charging you for the first 15 minutes until 8.

Adding time to the meter: old meters let you add another quarter to add time, e.g. if you glanced in at the coffee shop after you had already put money in the meter and noticed that there were no vacant tables, so you would have to go across the street, and wouldn't be back by 8:30.  New meters print a receipt for you to put on your dashboard, and don't let you add time to the end of the time interval you have already bought.

Other people must have noticed other advantages and disadvantages...

Misc. repugnant transactions

Sometimes some transactions are so repugnant that nothing but an armed response seems sufficient:

Multi-agency armed raid hits Rawesome Foods, Healthy Family Farms for selling raw milk and cheese
"A multi-agency SWAT-style armed raid was conducted this morning by helmet-wearing, gun-carrying enforcement agents from the LA County Sheriff's Office, the FDA, the Dept. of Agriculture and the CDC (Centers for Disease Control)."

HT: Zane Selvans
***********************

Workplace romance is often regarded as a repugnant transaction, and the rules that different universities try to enforce are varied. Inside Higher Ed reports:

"According to the American Association of University Professors,policies regarding relationships between students and professors vary across the country. Some institutions, such as the University of Michigan, do not expressly prohibit faculty-student relationships, but advise faculty members against them and require faculty members to notify superiors of relationships to avoid conflicts of interest. The University of Iowa prohibits faculty members from entering into romantic or sexual relationships with students they are instructing, evaluating, or supervising.
...
In recent years, several campuses have implemented “zero-tolerance” policies. In 2003, the University of California adopted a policy prohibiting romantic or sexual relationships between faculty members and students they are teaching or have a reasonable expectation of teaching in the future. Last year, Yale University adopted a policy expressly prohibiting relationships between faculty members and undergraduate students, regardless of whether there is any chance the professor will teach the student. “Undergraduate students are particularly vulnerable to the unequal institutional power inherent in the teacher-student relationship and the potential for coercion, because of their age and relative lack of maturity,” the policy states."
*************

Revisions to old laws against scalping tickets to sporting events (reselling them at much higher than face value) are under discussion in MA: For ticket resellers and fans, the game may be changing

"Massachusetts is one of five states with laws strictly limiting what resellers can charge. But with hundreds, maybe thousands, of outlets reselling tickets online and offline, the law is difficult to enforce. Plus, ticket scalping is viewed as a victimless crime.

"But by this time next year, legislation under consideration on Beacon Hill could, if passed, make the secondary market in Massachusetts a much different place for fans and licensed resellers. Some overhaul of ticket reselling regulations appears to have legislative support, but it is unclear what form it might take, or whether it would pass. Hearings are scheduled for this month.

One of the bills comes from state Representative Michael Moran, Democrat of Brighton, who has proposed legislation to make the secondary market fully legal - and perhaps more fan-friendly.

"The proposed law would remove most restrictions on reselling tickets, effectively uncapping the secondary market, and institute greater consumer protections regarding refund and cancellation policies."
*********
And finally:

England players warned about their behaviour after night out at 'dwarf-throwing' bar

"Headlines on Thursday morning alleged that Tindall, who recently married the Queen’s granddaughter, Zara Phillips, was acting inappropriately while drinking in a Queenstown bar last Sunday, where a “dwarf-throwing contest” was the primary entertainment."

If it were legal to sell organs for transplantation, what would the ads look like?

From time to time as I maintain this blog, I get a popup window from Google saying that since the blog appears to be popular I could make some money by showing ads from Google AdSense.  So far I have resisted, although an extra skim latte every week or so is tempting.

But I was recently on a site promoting deceased organ donation of transplantable organs. Apparently they are getting those lattes, since this ad appeared at the bottom of their site, giving a glimpse into an alternative universe in which organs are bought and sold:

Organ Sales & Service  We carry Lowrey & Roland Organs Service all brands 781-893-6644 www.MainStreetMusicBoston.com

And once you enter that alternative universe, you notice that even the WSJ could be there: this story (pointed out to me by Eric Budish) ran on Friday--
Trafficking in Organs, Mr. Bishop Pipes Up to Preserve a Bit of History  

""We think of ourselves, like the curator of a historical site or the park ranger at Paul Revere's house, as being stewards," says Mr. Bishop, the white-bearded, 56-year-old executive director of the Organ Clearing House, a Charlestown, Mass., company and part of a growing community of "organ rescue" operations."

Repugnance can be local: horse sausage in France

A repugnant (and even illegal) transaction in one place may be perfectly ordinary in another. Alex Peysakhovich recently came by with some horse meat sausage from a boucherie chevaline in France...

Speed of transactions in algorithmic finance

Markets suffer from congestion when there isn't enough time to make or evaluate all the offers that participants want to make. Even markets in which offers can be made very quickly can suffer from congestion, as I discovered years ago when I studied a labor market with about a six minute turnaround time between getting an offer rejected and making a new one.

In financial markets, the time required to make an offer is sometimes called the latency time, and it apparently can never be short enough: The New Speed of Money, Reshaping Markets

"In this high-tech stock market, Direct Edge and the other exchanges are sprinting for advantage. All the exchanges have pushed down their latencies — the fancy word for the less-than-a-blink-of-an-eye that it takes them to complete a trade. Almost each week, it seems, one exchange or another claims a new record: Nasdaq, for example, says its time for an average order “round trip” is 98 microseconds — a mind-numbing speed equal to 98 millionths of a second.

The exchanges have gone warp speed because traders have demanded it. Even mainstream banks and old-fashioned mutual funds have embraced the change.

“Broker-dealers, hedge funds, traditional asset managers have been forced to play keep-up to stay in the game,” Adam Honoré, research director of the Aite Group, wrote in a recent report.

"Even the savings of many long-term mutual fund investors are swept up in this maelstrom, when fund managers make changes in their holdings. But the exchanges are catering mostly to a different market breed — to high-frequency traders who have turned speed into a new art form. They use algorithms to zip in and out of markets, often changing orders and strategies within seconds. They make a living by being the first to react to events, dashing past slower investors — a category that includes most investors — to take advantage of mispricing between stocks, for example, or differences in prices quoted across exchanges.

"One new strategy is to use powerful computers to speed-read news reports — even Twittermessages — automatically, then to let their machines interpret and trade on them.

"By using such techniques, traders may make only the tiniest fraction of a cent on each trade. But multiplied many times a second over an entire day, those fractions add up to real money. According to Kevin McPartland of the TABB Group, high-frequency traders now account for 56 percent of total stock market trading. A measure of their importance is that rather than charging them commissions, some exchanges now even pay high-frequency traders to bring orders to their machines.

"High-frequency traders are “the reason for the massive infrastructure,” Mr. McPartland says. “Everyone realizes you have to attract the high-speed traders.”

A formerly repugnant sport

Recall that mixed martial arts are only slowly gaining acceptance. So it shouldn't be so surprising to read that professional football was once repugnant also. The New York Times reviews the book THE BIG SCRUM: How Teddy Roosevelt Saved Football by John J. Miller.

"On the first page of “The Big Scrum: How Teddy Roosevelt Saved Football,” John J. Miller’s informative account of Roosevelt’s impact on the sport’s early years, readers are taken back to 1876 and a contest between Harvard and Yale. It was the first game Roosevelt, then an 18-year-old Harvard freshman, ever attended, and it propelled him into a lifelong love of the sport. Its physical dangers, he thought, helped build character.

"Dangerous it certainly was. In its earliest forms, football veered toward the brutishness of English rugby, and by the time of Roosevelt’s presidency, it had resulted in a rash of player deaths (18 in 1905 alone). To save the game from those who wanted to abolish it completely, Roosevelt used the “bully pulpit” to push for enormous rules changes to improve safety. But he obviously had mixed feelings. In 1895 he wrote that he wanted to eliminate “needless brutality,” but that he would rather keep the game as it was than lose it completely."

Reverse fraternity and sorority rush at Princeton

Here's a Princeton news release about a decision to delay sorority and fraternity recruiting--"rush"--until after the freshman year: Princeton to ban freshman affiliation with fraternities, sororities as of fall 2012

"Beginning in the fall of 2012, Princeton University will prohibit freshmen from affiliating with a fraternity or sorority or engaging in any form of "rush" at any time during the freshman year.

The decision to institute the ban is being communicated this week to all returning Princeton undergraduates by President Shirley M. Tilghman, who made the decision based on recommendations from a student-faculty-staff working group on campus social and residential life that submitted its report last spring. The decision is being communicated to all entering freshmen and their families by Vice President for Campus Life Cynthia Cherrey and Dean of Undergraduate Students Kathleen Deignan.

In addition to prohibiting freshmen from affiliating with fraternities or sororities or engaging in the recruitment/membership process known as rush, the ban will prohibit students in the other three classes from conducting or having responsibility for any form of rush in which freshmen participate. As recommended by the working group, there will be no prohibition on membership in fraternities and sororities after freshman year, although the University will continue its longstanding policy of withholding official recognition for such organizations.

...

In their letter to entering freshmen, Cherrey and Deignan pointed out that for most of Princeton’s history, membership in fraternities and sororities was prohibited. These organizations began to reemerge at Princeton in the 1980s, although unlike at many other campuses, none of the fraternities or sororities at Princeton has houses. All Princeton freshmen and sophomores live on campus in residential colleges, as do some juniors and seniors, while most juniors and seniors take their meals at off-campus independent eating clubs while continuing to live in University housing.

...

Approximately 15 percent of Princeton undergraduates participate in four sororities and about a dozen fraternities.

*******************

The name "rush" comes from the unraveling of fraternity and sorority recruiting, which became earlier and earlier over time.  Here's an old paper on the subject:

Mongell, S. and Roth, A.E., "Sorority Rush as a Two-Sided Matching Mechanism," American Economic Review, vol. 81, June 1991, 441-464

The Receivables Exchange and the NYSE

I've been following The Receivables Exchange in several prior posts, and now the NYSE is interested too: today's WSJ reports NYSE Euronext Bulks Up In Market for Receivables.

"NYSE Euronext plans to boost its role in helping companies secure short-term funding, hiring a longtime GE Capital executive as part of an initiative that includes buying a stake in an electronic market for corporate receivables.

"The parent of the Big Board aims to use its investment in the New Orleans-based Receivables Exchange as another venue for public companies to borrow money, complementing the long-term funding provided via stock-market listings at a time when businesses face financing difficulties.

"NYSE has taken a minority stake in the four-year-old venture and hired Paul DeDomenico, previously chief executive of GE Capital's working-capital-solutions group, to lead the exchange group's corporate-receivables programs.

"The moves, which come amid a fierce political debate over bank lending to small-and-midsize businesses, could provide an advantage to the NYSE in its battle with competitors over share listings, by allowing the Big Board operator to offer a broader suite of services to companies that choose to list with it. And the moves provide an entry point to a market in receivables estimated by the companies at $17 trillion in size domestically.
...
"The Receivables Exchange formed in 2007 as a platform for companies to auction their accounts receivable to buyers like hedge funds and commercial banks. The eBay-like system lets sellers of receivables generate short-term cash quickly, while buyers can book a profit when debts are paid back.
...
"Upheaval in the corporate lending market has provided an opening for the company, where trading volumes of accounts receivable in its U.S. market for small-and-midsize businesses leapt nearly six-fold from 2009 to 2010.

"This year the value of receivables bought and sold on the platform is on pace to top $1 billion in value, according to Nic Perkin, the Receivables Exchange's president and co-founder.

A choice prediction competition for simple extensive form games

The following announcement was recently circulated, and might be of interest:

A Call for participation in a choice prediction competition for simple extensive form games

Dear Colleagues,

We write to invite you, and your students, to participate in a new choice prediction competition that is conducted as part of the special issue of the journal Games http://www.mdpi.com/search/?s_journal=games&s_special_issue=648

The competition focuses on the prediction of behavior in one-shot extensive form games. In these games a proposer chooses between action Out, which enforces “outside option” payoffs on the two players, and action In. If In is chosen then the responder determines the payoff allocation by choosing between action Left and action Right.  The competition is composed of two independent sub-competitions: one that predicts the proposer’s behavior and another that predicts the responder’s behavior.

The organizers first ran (in May 2010) an experimental study of 120 games that were randomly selected from a well-defined space of games. The raw experimental results of this study, referred to as the “estimation experiment,” are presented in the competition’s website (http://sites.google.com/site/extformpredcomp/home). In addition, the competition website includes the rules of the competition, and a link to a paper that summarizes the results of the estimation experiment and explores the value of several baseline models (https://sites.google.com/site/extformpredcomp/EEREFG.pdf)

The site explains that the goal of the participants in the competition is to predict the results of a second experiment. This study, referred to as the “competition experiment,” will be kept confidential until 2 December 2011. The competition experiment uses the same method as the estimation experiment, but studies different games (drawn from the same space of games) and different subjects.

You are invited to participate in the competitions, and/or to use it as one of the assignments to your students for the 2011 Fall semester (see details below).  To participate in the competition you will have to email us a computer program (in MATLAB, Visual Basic, or SAS) that reads the parameters of the games (the incentive structure) as input, and predicts the main results as output. The program should be an implementation of your favorite model. To develop and/or estimate your model you are encouraged to analyze the data of the estimation experiment, and to build on the baseline models that were posted in the competition website.  To use the competition as a class assignment you should follow the assignment instructions in the site https://sites.google.com/site/extformpredcomp/registration-1.

The submitted models will be ranked based on the mean squared deviation between the predictions and the results of the competition experiment.

The prize for the winners will include an invitation to publish a paper that describes the winning model in Games, and an invitation to a special workshop. The submission deadline for this competition is 1 December 2011. You are allowed to submit one model as a first author and to co-author up to two additional submissions.

Using the competition as a class assignment:
Professors who want to use the competitions as one of their class assignments are asked to contact us at gamespredcomp@gmail.com.  The professor will receive a course ID to give the students.  To be associated with a course, submissions will specify the course ID and the professor’s name. The models will be treated like any regular submission, except that the professor will also receive a copy of the models’ rankings assigned with his/her class ID.


Best Regards,
Eyal Ert, Ido Erev, and Al Roth

Beautiful work and the beauty premium

It pays to be beautiful, but it's risky to try to make it big on beauty alone.
That's the message from recent books and other work showing that good looking people earn more--there's a "beauty premium," but that a career in modeling is high risk.

Slate reviews Pricing Beauty, by BU's Ashley Mears, a book about an industry with a good looking work force, models and modeling agencies.

"Through interviews, Mears investigated the financial state of the (unnamed) small modeling firm she worked for in Manhattan. She found that 20 percent of the models on the agency's books were in debt to the agency. Foreign models, in particular, seem to exist in a kind of indentured servitude, she writes, often owing as much as $10,000 to their agencies for visas, flights, and test shoots, all before they even go on their first casting call. And once a model does nab a job, the pay is often meager. Mears herself walked runways, sat for photo shoots for an online clothing catalog, modeled for designers in showrooms, and went on countless unpaid casting calls. During her first year of research she worked mornings, evenings, and weekends around her graduate classes and earned about $11,000.
...
"The alternative to high-fashion poverty is to be a "money girl," working for catalogs and in showroom fittings, jobs that pay well and reliably. The best-paid model at Mears' agency, for instance, was a 52-year-old showroom model with "the precise size 8 body needed to fit clothing for a major American retailer. She makes $500/hour and works every day." But the commercial end of modeling is widely derided within the industry as low-rent, as mere work without glamour. Once a model has done too many commercial jobs, she is thought to have cheapened herself, and it's exceedingly difficult for her to return to high fashion."
**********
Over the last few years in economics, there have been a lot of studies about pricing beauty in the general work force, where there seems to be a premium for looking good.
See Dan Hamermesh's Beauty Research Papers, and his book Beauty Pays--Why Attractive People are More Successful

A nice experimental paper in the AER by Markus Mobius and Tanya Rosenblat, Why Beauty Matters, even shows that some of the beauty premium can be collected through telephone interviews in which the interviewer can't actually see how attractive the interviewee is. This suggests that some of the beauty premium may come from the increased self confidence that beauty bestows.

(Of course not only the beautiful can get the part of the premium available over the phone: this must be what people mean when they tell me I have a face for radio...:)

Things we cannot forget

9/11

http://www.september11news.com/AATower2ExplodeGettyImages.jpg

http://www.esquire.com/cm/esquire/images/fallingman-lg.jpg

Magic and market design

I was struck by some of Michael Trick's thoughts on Operations Research, and how they applied as well to Market Design: Explaining Operations Research to, and being, a Muggle.

Taking his cue from the Harry Potter novels, he writes:
"A wonderful aspect of working in operations research, particularly on the practical side of the field, is that you both work with Muggles and get to be a Muggle."
...
"Over the years, I have started as a Muggle about cell-phone production, sports scheduling, voting systems, and a number of other areas.  And I got to read about these areas, and talk to smart people about issues, and, eventually, become, if not a Wizard, then at least a competent student of these areas.

"Some fields are, by their nature, inward looking.  The best operations research is not, and that is a true pleasure of the field."

*********

There's some additional pleasures to being a market designer, aside from those of being both a novice among experienced market participants, and at the same time an economist among market participants who may not fully understand the forces buffeting their particular market. It has to do with the fact that economists and economics used to be confined to the study of existing markets, and now we sometimes get to help build them.

This reminded me of a different book about magicians, “Jonathan Strange & Mr Norrell:  A Novel” by Susanna Clarke.  The novel describes a world in which magic used to exist, but no longer does…until some new students of the craft come along.

“Mr Segundus wished to know, he said, why modern magicians were unable to work the magic they wrote about….

“The President of the…society…explained that the question was a wrong one.  ‘It presupposes that magicians have some sort of duty to do magic—which is clearly nonsense.  You would not, I imagine, suggest that it is the task of botanists to devise more flowers?  Or that astronomers should labour to rearrange the stars?  Magicians…study magic which was done long ago.  Why should anyone expect more?’ ”

Two-career couples and economic development (in Denmark)

Someone in Denmark is taking married couples seriously: Get help finding a job for your international employee’s partner

"There is a greater chance your international employee will stay in your organisation if his or her partner is also happy in Denmark. The best way to develop a network and a good social life is if the relocating partner is working during his or her stay in Denmark. Having a job is important for many relocating partners. Many partners are well-educated and bring experience from a previous career.

"If you wish to help your international employee, it is a good idea if your organisation helps the family to clarify how the relocating partner can find a job and to support their job hunt. A good starting point is to direct the relocating family to workindenmark.dk. In the Workindenmark job bank, the partner can find English job ads from Danish companies and create a profile in the cv-bank. You can also advice them to contact their regional Workindenmark-centre. Here, they can get professional help with their job-seeking, free of charge. They can attend seminars on how to write an application and CV which appeals to Danish employers and they can get individual guidance.

"If your organization wants to go the extra step to retain the international employee you can freely join Workindenmark's "Partner Link". Click here to read more about Workindenmark's "Partner Link".

HT: Stephanie Hurder

Instructions are part of a market's design

Whenever my colleagues and I help design a new marketplace, we're very aware that a part of the market mechanism are the instructions that accompany it. There's no reason to assume that the benefits of a strategy-proof mechanism, for example, will be realized if the participants aren't made fully aware that it is strategy-proof, so that it is safe for them to reveal their true preferences.

That is why I was glad when the HBS MBA program invited me to explain the modified serial dictatorship mechanism that Clayton Featherstone and I designed for the first year of operation of a 2nd year MBA field experience module, in which Harvard MBA students will choose countries in which to spend time at a company.  (We felt it was particularly important to start with a strategy-proof mechanism, for reasons we hope to write about in the not too distant future.)  Here's the video of my explanation (which can also be found at http://video.hbs.edu/videotools/play?clip=aroth_field2_algorithm or, if that is gated, http://stream.hbs.edu/remediated/cd/aroth_field2_algorithm.mp4)

While I think of it, let me mention that Clayton is an unusually talented and versatile market designer, theorist and experimenter who will be on the econ job market this year.

School choice around the U.S.: some short video interviews

Northwestern's journalism school has a project on school choice that allows you to click on a map of the U.S. and see very short (1 minute) clips of video interviews they did about school choice in the indicated cities:
 One size does not fit all

You can glimpse my filing system for journals in the background of interviews they did with me and Neil Dorosin of IIPSC about Boston, New York, and Denver...

Mechanism design conference: Copenhagen, Sept. 6-9.

WORKSHOP: NEW TRENDS IN MECHANISM DESIGN, Sept 6-9, 2011.

"A main focus of the workshop will be contributions from computer science to the field of mechanism design."

Keynote Speakers:

• Rick Antle, Yale School of Management, Yale University
• Peter Cramton, University of Maryland
• Uriel Feige, the Weizmann Institute
• Jason Hartline, Northwestern University
• Nicole Immorlica, Northwestern University
• Hervé Moulin, Rice University
• Tim Roughgarden, Stanford University

Repugnant markets involving altruistic motivations

Kim Krawiec follows up on Kieran Healy's work on markets for organs, and how the distinction between gift giving and buying and selling isn't so clear.

Krawiec writes (I quote at length, but not the whole thing):

"...I agree with Kieran that financial incentives for human organs are more likely to win social acceptance if they resemble the gift-based allocation systems that have already gained social legitimacy. And the oocyte market – a clearly market-based system with the trappings of gift, including the language of donation -- is a good example of this phenomenon. 

In fact, as I’ve discussed before, this disconnect between market realities and gift narrative is an important feature of many taboo trades.  By normalizing otherwise jarring transactions, gift narratives may facilitate markets that otherwise would stagnate under the weight of social disapproval. For those, like me, who believe there is social value in enabling the infertile to reproduce or those dying from kidney failure to live – and, by corollary, allowing those who consider themselves better off by the receipt of compensation in exchange for an egg or kidney – to do so, this is a good thing. 

At the same time, though, the oocyte market example also illustrates the costs of denying market realities in favor of the pretense of gift exchange -- gifts in name only: 

(1) Legal misfit

Gift-based exchange regimes are typically governed by a different set of legal rules than are market-based exchange regimes.  We tend to recognize, for example, the possibilities for opposing interests and opportunistic behavior in a regime of market-based exchange.  And many legal rules governing market-based regimes are designed with these considerations in mind. In contrast, we often assume (incorrectly, especially when the gift is one in name only) an absence of opportunism and an alignment of interests in the case of gift-based exchange. 

(2) Social stereotypes

I do not know if, or how, this would play out in organ markets, but it has for some time concerned me with respect to reproductive markets, especially the oocyte and surrogacy markets.  Scholars have long noted the presumption that many services provided by women, including reproductive and domestic labor, should be provided altruistically, despite their high economic value.  Says Mary Anne Case, for example:

Much of what women have market power over, such as their sexual and reproductive services, they have long been expected not to commodify at all. Even when monetary compensation is allowed, it is often kept low and female providers are expected to be interested in rewards other than money.

The continued insistence that egg donors are, and should be, motivated primarily by altruism and the desire to help others, rather than by the desire for monetary compensation, threatens to reinforce gendered notions that the market activities of women are driven in large part by altruism and that women as a group are uninterested in reaping the full gains of trade from the provision of their goods and services. 

The comparison to sperm markets is especially telling. The insistence on the altruistic motivations of egg donors is in stark contrast to the presumed motivations of sperm donors, who are recruited through materials that ask, “Why not get paid for it?” and advertise, “your sperm can earn!” 

...

In the end, gifts in name only represent a trade-off.  On the one hand, the language of donation coupled with the realities of market-based exchange has the capacity to legitimate otherwise troubling exchanges, facilitating life-saving operations and parenthood for the infertile.  At the same time, gift-in-name-only exchange has consequences for the social, legal, and market structure of these industries, and for the consumers, producers, and others, including the public-at-large, affected by them."